February | 2013 | Barataria - The work of Erik Hare

The Superbowl is behind us, as are the depths of Winter. In many ways the year really starts now that January is behind us and the plans for the year are set. As we have come to expect since the real depth of the latest downturn, January 2010, there is good news always tempered with not so great news.

Jobs are growing, yes, but the shock was the downturn in GDP growth in 4Q12 – a 0.1% annualized loss. Most analysts who didn’t see this coming (your humble writer included) expect this was due to uncertainty in Washington, a result that sounds like a cheap excuse. But it’s all we have given that there really is no reason to expect that things are continuing to slowly, ever so slowly, improve.

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What is money? Your answer may depend a lot on how much of it you have. Ultimately, the main purpose of money is convenience. A system of barter works pretty well when two people have things each other need – someone with chickens meets up with someone else who recently slaughtered their pig and both have bacon and eggs. But if you can also exchange those eggs for money you can save it up to buy something different or bigger.

As we’ve concluded before, Adam Smith was right – money is a matter of belief. Whether it’s gold, Euros, or Canadian Tire Money it’s worth whatever you believe it is worth. Our own US Dollar is backed by the “Full faith and credit of the US Government”, which is scary if you think about it.

But money is more than convenience and faith – it’s what it takes to make things happen. And that’s worth thinking about some more.

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